March 15, 2018

The Honorable Paul Ryan
H-232
The Capitol
Washington, D.C. 20515

Dear Speaker Ryan,

On behalf of the more than 1 million members and supporters of the Council for Citizens Against Government Waste (CCAGW), I urge you to reject any effort that would prohibit pass-through payment status for biosimilars in Medicare Part B should any such provision be attached to the Omnibus appropriations bill.

In 1999, Congress allowed pass-through payments for certain new drugs, medical devices, and biologics for the Medicare Part B program in the Fiscal Year 2000 Consolidated Appropriations Act to encourage more development of these products, help manufacturers educate prescribers on their value, and get them established in the marketplace. The Centers for Medicare and Medicaid Services (CMS) established a pass-through payment for qualifying biologics, set at the Wholesale Acquisition Cost (WAC) plus six percent for six months, then set at the Average Sales Price (ASP) plus six percent. When biosimilars entered the marketplace, the CMS pass-through payments for qualifying biosimilars was set at WAC plus 6 percent and then at the ASP of the biosimilar plus 6 percent of the reference product’s ASP. The products that receive pass-through status get protection for about two to three years from other payment policies that may be established during this period to allow for stability.

During consideration of H.R. 1892, the Bipartisan Budget Act of 2018, a provision was added in the House that would have prevented pass-through reimbursement payments for qualifying new biosimilars. Fortunately, the offending provision was removed in the final bill. However, CCAGW is concerned this provision could revived and added to the Omnibus appropriations bill.

CCAGW has long supported and advocated for the development and marketing of biosimilars. In 2017, the RAND Corporation estimated the potential savings from biosimilars to be $54 billion over 10 years, with a lower range of $25 billion to an upper range of $150 billion. RAND cautioned that there is much uncertainty in the U.S. biosimilar market due to changing payment arrangements, future regulatory policies, legal challenges, and patient and prescriber acceptance of biosimilars, all of which will affect the magnitude of the savings.

The U.S. still lags far behind Europe when it comes to marketing and using biosimilars. Adding another hurdle by unwise Congressional action will add more uncertainty over the future of biosimilars. It is imperative the current pass-through payment policy for biosimilars be maintained and that any attempts to change this policy be rejected.

Sincerely,

Tom Schatz
President, CCAGW

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